One year ago, Boston University economist and business writer David Weil took over as the head of the Department of Labor’s most important office, the wage and hour division. In that time, his small corner of the federal bureaucracy has been transformed from innocuous cog to powerful lever in the recent efforts by Barack Obama’s administration to vigilantly police companies that violate the rights of American workers.
Weil’s leadership in the fight against employee misclassification — the dramatic expansion of independent contracting and franchising and employers’ efforts to misuse these categories for their gain — has been invaluable. He argues that this practice is at the heart of the historic gap between wages and profits in the American economy, and he has worked hard to rein in abuses.
His office still faces serious institutional constraints. The limited reach of government inspectors only heightens the necessity of workers and their allies to build power from below. But in combination with innovative and increasingly prevalent activist forces, his office is proving the importance and influence of a well-staffed Labor Department — a target of budget cuts by congressional Republicans.
Weil’s appointment last year garnered positive attention by liberal press. He would be “presiding over a major shift in how the division polices the workplace,” The Nation reported upon his appointment. A colleague of his told The Boston Globe, “He believes that labor standards really matter … [and] they’re not just things written on a piece of paper that you’re free to ignore when it’s convenient.”
The wage and hour division’s track record in the year since his appointment has been good. When the president announced last year that workers on federal contracts would earn a minimum hourly wage of at least $10.10, it was the division that was responsible for drafting the details, and the office focused on extending the new minimum to subcontractors as well. When the president announced that he was making sure white-collar workers were earning overtime, it was the division that decided how much they had to make — $50,440 or less in 2016 — to qualify. Weil’s office is also responsible for investigating violators, whether it was child labor on farms in Utah and California or wage theft at Papa John’s franchises in New York.
His academic research has informed his division’s policies. He is an expert on changes in employment practices, particularly the competitive pressures on companies to outsource more and more of their workforce, keeping costs down and profits high. This history is well known: Empowered in the Ronald Reagan era, investment managers began buying companies, firing their workers and reselling them as newer, leaner and more efficient. Yet when the frenzy to outsource, subcontract and franchise “skirt the social costs resulting from that flexibility,” there is a role for government to address the problem, as Weil writes in his 2014 book, “The Fissured Workplace.”
The most influential change to come out of the wage and hour division has been clarifying what exactly it means to be an employee in today’s economy. In July he took the unusual step of releasing an administrator’s interpretation of the Fair Labor Standards Act, a legal document explaining just who should benefit from the New Deal–era law. In effect, the interpretation is a warning to businesses that overuse independent contracting for their work needs in order to cut costs and circumvent federal labor law.
Under the new interpretation, companies must pay minimum wage and overtime to many workers currently hired as independent contractors. As he writes in the interpretation, the relevant test is “whether the worker is economically dependent on the employer (and thus its employee) or is really in business for him or herself (and thus its independent contractor).”
Signaling a shift to proactive enforcement, nearly half of wage and hour division investigations in 2014 were targeted rather than complaint-based. This was “a 27-point increase from FY2010,” noted law firm Seyfarth Shaw, a major anti-union firm, in an uncomfortable blog post. But even under new leadership, the department can only scratch the surface of wage theft and other abuses in the U.S. economy. For example, in Seattle — a midsize city — there is just one Department of Labor investigator for every 171,744 workers, according to the National Employment Law Project. The chance of an employer being inspected in that city in 2005 was below 0.001 percent.
What’s more, the enforcement of existing employment laws is subject to the political dictates of not only the current administration but Congress as well. The division has been fighting for over 300 new full-time positions to ensure America’s workplace protections are real, but Republican budget proposals seek to cut the division’s funding by at least 20 percent relative to the president’s budget. Slashing away such a dramatic chunk of the budget would force layoffs on an already overworked staff and further limit the effectiveness of Weil’s efforts.
In his proposed 2016 budget, Obama has attempted to correct for this understaffing at the department. In the administration’s budget the wage and hour division, Seyfarth Shaw notes, “has requested a 22 percent budget increase, from about $227 million in FY2015 to about $277 million in FY2016.” That money would allow for hundreds of new hires as well as technology upgrades that would allow for more sophisticated targeting and tracking of labor-law violators.
In response, the Republican Senate’s proposed fiscal plan provides $67 million less for the wage and hour division, stymieing more aggressive enforcement.
One way around this impasse would be for the government to partner with community groups and worker centers in working-class neighborhoods to identify illegal employment practices. Weil has endorsed the concept: In a report he prepared in 2010, he wrote that the wage and hour division should “reach out to the worker advocacy community” to help report violations and target investigations. A vigorous effort to follow up on this idea could be a great boon to his department’s efforts.
Beyond that, Weil will need to rally the force of public opinion for stronger action. Three-quarters of Americans favor strengthening workers’ rights and raising the minimum wage. It is time for them to speak up in support real enforcement of labor standards. Because without popular pressure to back them, there will be only so much even the best bureaucrats can do.